Updated: May 27, 2025
At 5.5% in the UK, 5% in the USA, 4% in France, 3.5% in Germany and even over 3% in Japan, yields on 30-year Government debt in the main Western countries have been rising steadily for several months.
These long-term sovereign yields are now at levels rarely or never reached in 15 years, and even 25 years in Japan. They directly influence the cost of financing private debt and swap rates in the various currency zones.
The meeting of supply and demand for sovereign securities is particularly closely scrutinized at each public auction, which each month can reveal and amplify investors' perception of sovereign risk.
The success of the latest UK auction is largely attributed to the choice of shorter-than-expected maturities, an example that other countries may have to follow to adapt to the rising cost of very long-term financing.
Investors could continue to pull out of very long rates in 2025: the latest US “BBB” budget (for “Big Beautiful Bill act”), narrowly passed by US Congress, is worrying investors, as it will massively widen the US budget deficit by 2030.
This “BBB” is not unconnected with the loss of America's last AAA rating, while in Europe, Governments are faced with massive investment and rearmament spending against a backdrop of high risks to economic growth.
In Japan, the United Kingdom and the United States, yields on long-term public debt already have the potential to create shocks in the financial sector, which is heavily invested in bond debt: unrealized capital losses are all the greater on very long assets.
The reaction of central banks to potential shocks remains uncertain,in the context of tariff uncertainty and persistent inflationary pressures.
The massive steepening of the yield curves is perhaps still in its infancy, and continues to catch out all those who, thanks to lower short-term rates, expected to benefit from more attractive long-term rates.
The volatility of the fixed-income markets is definitely not over.
